On June 3, iSelect Custom Benefits Store, HAP and Priority Health teamed up to gather a group of experts to discuss the state of health care, and the options for employers.

In light of the changes prompted by the Affordable Care Act, the panel addressed the ways in which employers can offer health benefits that suit the needs of employees. The panel brought viewpoints from all angles: human resources, CFO, broker, insurance company and private exchange technology.

The discussion was hosted in front of a live audience at the Michigan State University Management Center in Troy. Input from these experts is below.

Duggan: How are things different since the Affordable Care Act has passed?

Galvin: First of all, one thing that hasn't changed is employers' desire to control costs and provide benefits to their staff. What has changed is who the consumer is. Historically, the employer, the CFO, the HR directors were our clientele and our consumers, and that spotlight is slowly being shifted over to the individual, whether it is on an individual basis or within the employer through private exchanges.

Selinsky: It is so complex being the expert. Along the way, they keep changing the game. As a carrier, it means continually adjusting, and then making sure we are providing those solutions that are going to be the right solutions for the consumer, for employer group customers, and working with the agent community to make sure that they have the tools that they need and the product that they need to go out and meet the needs of the consumers.

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"We really need to shift our attention to engaging the consumer, and I think that a private exchange model, where the consumer actually starts seeing those dollars as income versus entitlement, goes a long way to start changing the conversation of the way people purchase benefits." — Denise Christy

Porte: Just after this passed, I attended a webinar about how you determine if you're a large group, a large employer, or a small employer. I was on this call for 35 minutes, and we were still talking about how we determined that. I said to myself, "I am a CFO. You count people up. There you go." So, at that point, I knew that this change that was coming was going to be a roller coaster, and so we just kind of buckled in.

Christy: The Affordable Care Act has done a lot in terms of changing the marketplace on insurance reform, but we really need to shift our attention to engaging the consumer, and I think that a private exchange model, where the consumer actually starts seeing those dollars as income versus entitlement, goes a long way to start changing the conversation of the way people purchase benefits, and as they purchase benefits differently, they consume health care differently.

Murthy: I deal with a broad range of compensation and benefits, so this has entirely changed the landscape for people like me because it is a changing landscape for the employers. There is a lot of confusion and a lot of misunderstanding in terms of how it is all working, and in some ways, it will take patience because people aren't understanding that whenever there's a huge change in America, it takes time. If you think about Social Security, when it was enacted, that was a major change in this country. It took years and years for that to be implemented. That is going to happen with health care.

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Scott Norman

Norman: The ACA has created a tremendous amount of change, which can be challenging. It also creates opportunities for employers to look at things differently, and for agents to approach the market differently for health plans. At Priority Health, we have a 30-year history of doing two things very well: One, being innovative, and what serves us well now is our flexibility and innovation to be able to do things differently, such as partnering with iSelect and doing different things as the market evolves. You have to be flexible, and that is what I would say, from a health plan perspective, that is probably the number one thing that we have done is try to be as flexible as possible to provide the best array of solutions for employers, for agents, as the market has shifted because the market has shifted and continues to shift.

Green: So six years ago, when Liazon started, they were one of the pioneers in the private exchange industry that created a technology-driven marketplace where employers could offer their employees benefits, where employees could go shop as individuals and get coverage. And trying to explain that to employers six years ago was very difficult. In the last 18 to 24 months, every single day in every single newspaper, every single 6 o'clock news report, there has been discussion of the ACA. There's been discussion of the exchanges and exchange technology, and now people fully understand that individuals can go and shop in the retail environment and buy coverage. That is the significant change that has created, the initiation of what I think is going to be a movement toward purchasing in this manner for benefits for employers and employees.

Duggan: One of the things that I know comes up a lot is the timing of things, the speed of adoption. Where do you see the issues?

Murthy: The approach used to be a defined benefit in a pension plan, where the employee stayed with the company for their entire life. At some point, in the late '70s, 401(k)s were enacted, but it didn't take off immediately. Now, mostly every company that does have a pension plan is on a defined-contribution approach, and I think it is helpful to think of it in that sense in terms of health care. It is a big change, so it is going to take time. The other aspect of it is the brass tacks in terms of how a law that gets changed. When law is enacted, it is just, basically, this broad thing, and there's all these things that have to be filled in.

Galvin: I think there's a lot of paralysis by analysis, and most employers are not really willing to jump into the deep end of the pool, as they say, because they are taking care of their employees. These are benefits that are there for their families and their children, and they want to make sure — what I have seen, they want to make sure that this is going to work.

Kaylin: We need to be able to control our own budget, but the problem is, even if we do this, we have got to maintain the minimum. We have got to maintain the affordability aspects, we have got to be able to provide plans that match our employees' needs, and then we have got to be able to set up a communication structure that really gets to the employees so they understand why we are doing what we are doing. We don't want to lose employees because another company provided better health care without having to think about it. So, it is kind of like stasis. A lot of companies are in paralysis because they are unable to totally make decisions yet, but it is coming.

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Steve Selinsky, Health Alliance Plan

Green: I can just sort of report from the front lines here of selling this innovative and new approach: private exchanges. There's a lot of action. Our numbers are through the roof in the first part of this year, and every single research study that I have seen is pointed toward a lot of adoption between now and 2019 for this strategy. It is understandable that there's a certain amount of chaos when you are entering a sea change and a real differential in the way things are done … and American business people don't want to change.

Norman: Think about HSA 10 years ago or so when HSAs were first introduced. Everybody kind of looked at it and said, "What do we do with this?" And, now, 30 percent of our membership, our commercial group membership, is enrolled in an HSA.

Selinsky: That one-size-fits-all benefit plan is no longer even going to fit the group. In order to meet the costs, employers are going to probably have to pick a plan that doesn't even meet the needs of anyone. So where the private exchange model, through iSelect or, another private exchange, really works well, is that now you tell the employee, "Here's what we are going to spend; go out and pick what works for you."

Duggan: What are some of the significant shifts you are seeing in the marketplace right now?

Norman: There is a shift to a more consumer-driven approach in terms of individuals making decisions, whether it is in an individual or in a private exchange environment, that has absolutely changed how we have to think about how we build those plans, how we market our plans, the technology that we have in place to support it. Part of the reason we've supported iSelect was it gave us a broad opportunity to enter the market on the private exchange on the group side, in the small-group market all the way up to the mid-large market as well, and it could be written through any agent in Michigan. So anybody can come to iSelect to write a private exchange solution for an employer group in virtually any market segment. That was very appealing to us because we know that is going to be part of what we do going forward.

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"There's been discussion of the exchanges and exchange technology, and now people fully understand that individuals can go and shop in the retail environment and buy coverage. That is the significant change that has created, the initiation of what I think is going to be a movement towards purchasing in this manner for benefits for employers and employees." — Chuck Green

Green: Consumerism is a great advancement in the distribution of benefits because you are putting the decision right where it should be. When you have two plans for 70 people, it fits two people, and the other 68 are not, you know, right in the eyes of what you pick for them.

Kaylin: A lot of companies have a war on talents, right? Where we are trying to find the right people, we are trying to get the right people to come to us. That is a real driver because people are telling you, "Why do I want to come to this company?" Because the company is providing me with the best benefits package that I can use for me or my family.

Murthy: I think the one interesting thing about the Affordable Care Act is that it has made health care, from an employee perspective, more transparent and more focused in the sense that people really didn't pay as much attention to it in the past.

Selinsky: And I think the carrier, following what they said … the more skin in the game the employee has, and then the more engaged they are by having a plan that best fits them and their needs, the more likely they are going to utilize the technology and tools that we, as carriers, are investing in to help them become healthier and focus on wellness. And, in the long run, we are going to engage them, and we are going to create healthier consumers, which will allow us to keep the cost of health care down as much as we can by having healthier, engaged consumers.

Duggan: How do companies set the budget in terms of how to get to the right dollar amount for employees in a defined contribution?

Porte: There's really no secret formula here. We looked at it, and when we looked over the previous years and the increase that we received for our renewals, we had a sense of knowing, possibly, what it would be if we didn't select this. So I worked backward through it. We have … a young workforce, young families, and that is why this was so important to bring this tool on board because it is education, and it is communication. Those are key aspects of this, and the educational part of it, as a CFO, I loved it as a financial planning tool. I feel the biggest thing with financial planning is, what is the wild card nowadays? It is health care.

Miller: I would say it was almost a relief after going through some of the years of passing on the costs and giving less of the benefits. Because over the years, that is what we had to do. As a company, we ate a lot of that cost, but at some point, you have to pass some of it on to your employer, because that was the only way we were going to be able to offer benefits to our employees. So this comes around and we can give employees some choices. We are going to try to maintain our costs, but so you know, this is — this is what it is costing me, and I think that helps.

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"If you think about Social Security, when it was enacted, that was a major change in this country. It took years and years for that to be implemented. That is going to happen with health care." — Veena Murthy

Duggan: If I am the CEO, and I say, "Why don't I just give some money to my employees and they can make their own choices?" where am I going wrong?

Murthy: So, basically, the law is that, if an employer gives an employee money to go out on the individual exchange, whether it is a public exchange (such as state or federal exchanges) or a private exchange (for individuals, such as eHealthinsurance.com), that is not pretax or nontaxable. That was actually changed in the law, meaning not the regulations, not the guidance. The other piece of it is that the nontax aspect, the market reform aspect of health care, such as, covering preventive-cost provisions against pre-existing conditions, and things such as annual and no lifetime annual limit, all that is in the market reform nontax stuff. So, in other words, the penalty is very steep. It is essentially $100 per day per employee, and that's for each specific violation. So that is why you can't do that from a tax standpoint.

*Editor's note: Private exchanges being used by corporations are different than the individual exchanges referenced above. For an explanation on private exchanges see related story here.